Saturday, March 12, 2005

Ric Williamson on CDA with Cintra Zachry: "We'll get a share of the tolls when they recover their investment."

State, partnership sign deal on I-35 toll bypass

Ben WearAustin American-StatesmanCopyright 2005

The State of Texas and Cintra Zachry LP made what could be a 50-year marriage official Friday, signing a 103-page agreement for the Spanish toll road operator and its Texas partner to spend the next year or so creating a detailed plan for a tollway alternative to Interstate 35.

That 300-plus-mile road from San Antonio to Oklahoma north of the Dallas-Fort Worth area would be the first leg of the Trans -Texas Corridor , Gov. Rick Perry's 4,000-mile vision of superhighways, railroad clusters and utility easements. This first road would be called TTC-35.

Perry was on hand Friday, literally looking over their shoulders, as Texas Department of Transportation Executive Director Michael Behrens, Rafael del Pino, executive chairman of Cintra parent Grupo Ferrovial SA, and Zachry Construction Corp. President David Zachry signed three copies of the agreement and its 400 pages of supporting exhibits.

San Antonio-based Zachry will hold about a 15 percent interest in the partnership, officials said in December.

"In Texas , we do things bigger, better and first," Perry said.

The so-called comprehensive development agreement signed Friday contemplates paying Cintra Zachry $3.5 million for its short-term planning tasks.

The partnership would cover the $6 billion investment to build the several segments of the road, assuming it gets the go-ahead later from the state to do the construction, and would pay the state a total of $1.2 billion in concession fees.

The agreement is as notable for what it doesn't contain as for what it does.

The contract, for instance, does not address toll rates on the coming road, or operation of ancillary facilities along the tollway such as gas stations or hotels, or the $1.2 billion in concession payments, or any possible sharing of toll road profits down the road. Those all-important specifics will instead be part of separate agreements in the coming years.

"We'll get a share of the tolls when they recover their investment," said Ric Williamson, chairman of the Texas Transportation Commission, but the terms of such an income split will have to be negotiated.

The contract does guarantee Cintra Zachry the first shot at $400 million of the total cost of TTC-35, granting it first negotiation rights for that much work. All other segments could, in theory at least, go to other contractors.

That includes the likely first segment: the final 40 miles of Texas 130 from Mustang Ridge to Interstate 10 at Seguin.

The state, which expects completion of the northern 49 miles by the end of 2007, has already received environmental clearance for that section, according to Phillip Russell, director of the state Transportation Department's turnpike division. Russell said the state could have an agreement within a year with Cintra Zachry, or Lone Star Infrastructure, which is building the first 49 miles of Texas 130, or some other contractor.

Behrens said that if all goes as expected, that southerly section could be open for vehicles as soon as 2010.

As for the other sections of TTC-35, the planning process over the next 12 to 15 months will clarify when specific parts are built. In December, state officials said that the entire road should be done by 2014 and that tolls initially would be less than 20 cents a mile for passenger cars and pickups.

Under the comprehensive development agreement, the state and Cintra Zachry will spend the next 60 days "finalizing the scope of work" on their development of a master plan for TTC-35.

Russell said that should not be interpreted to mean that major issues remain to be worked out, but rather that there were some issues that legally couldn't be addressed until after a contract was signed. He said that those further talks on the scope of work would likely not result in any amendment to the agreement.

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